The wife of convicted Omaha investment scammer Bryan Behrens has filed for bankruptcy protection, noting in her petition that she cannot work because of health problems and that her husband is “illegally” incarcerated.
Michelle Behrens filed her petition in U.S. Bankruptcy Court in Omaha late last week, citing business-related debts of $1 million to $10 million and assets of between $100,000 and $500,000.
The filing didn’t specify the nature of the business, although it did list Bryan Behrens as a co-debtor. It also included a debt of $9.4 million listed as owed to the court-appointed receiver of his affairs, suggesting that the bankruptcy is related to the investment company Bryan Behrens ran and the restitution he was ordered to pay.
The filing is a Chapter 7 petition, one seeking to dissolve a business, not reorganize it. Bryan Behrens’ businesses included 21st Century Financial Group, National Investments Inc. and Ken’s Flower Shop. He also was a general agent for Kansas City Life Insurance Co. and a subsidiary, Sunset Financial Services.
Bryan Behrens in 2009 was sentenced to five years in prison and ordered to repay $6.8 million to 20 investors. He was convicted of defrauding investors by selling worthless promissory notes, diverting customer capital for personal use and paying off early entrants with money swept up from new ones, not earnings gains. The Securities and Exchange Commission said the fraud went on from 2002 through 2007.
Now, Bryan Behrens’ acts are causing problems for his wife, she noted in her bankruptcy filing, which was handwritten and prepared without the aid of an attorney. Michelle Behrens wrote in bankrutpcy papers filed with the court that she could not pay the $306 filing fee in installments because her “husband is incarcerated illegally.”
“I am currently medically unable to work,” the petition reads.
Attempts to reach Michelle Behrens were unsuccessful. She listed a home in Omaha and one in Honey Creek, Iowa, as assets worth a combined $475,000. Also listed as assets are $72,270 in deferred compensation from Kansas City Life and a $6,109 refund from the IRS.
Bryan Behrens appealed his sentence last year, saying he was shielded from incarceration by federal law that bars such a penalty in certain cases even when securities law violations have occurred. The “no knowledge” provision applies only to complicated securities laws and can exempt people from prison if they can show honest ignorance of the law.
Behrens’ appeal said he did not know the promissory notes he sold were considered securities under federal law. This year, the 8th U.S. Circuit Court of Appeals said it was clear he knew exactly what he was selling.
“We produced mountains of evidence,” said Jan Sharp, criminal chief with the U.S. Attorney’s Office in Omaha, which prosecuted Bryan Behrens. “He is lawfully incarcerated.”
Bryan Behrens preceded his wife in bankruptcy, filing his own petition this year from the federal penitentiary in Terre Haute, Ind.
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